B.C. predicting legal cannabis prices will drop

Galtero Lara
Octubre 10, 2019

Canadian licensed cannabis producers are expected to be $ 1.1 billion worth of legal potency, according to Cannabis Benchmarks.

"When the government was setting up the legal framework for cannabis", said Het Shah, managing director of New Leaf Data.

"They likely thought the online sales would be robust enough to keep the black market away". That has not happened yet.

Data released by Statistics Canada on Wednesday shows that while the price of pot was down this summer, Canadians are still paying almost twice as much for legal cannabis than for the illegal product. "At the same time we are continually reviewing the licensing application process and looking at ways to streamline the system to ensure broad access to legal cannabis in communities across the province".

The average illegal price of pot continued to fall and slipped to $5.59 per gram in the third quarter, down 5.9 per cent from $5.94 per gram in the second quarter.

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"We know from United States jurisdictions that have legalized that there can be significant price fluctuations in the early years and we expect prices to come down as supply ramps up". But it's still a lot cheaper to get the drug from illegal dealers. "Plain and simple", Craig Wiggins of the cannabis industry research group TheCannalysts told Yahoo Finance Canada last week.

Producing enough cannabis to meet a country's demand would typically be a good thing, but the black market still accounts for a large portion of the country's pot production.

"Cannabis was just such a case where everyone could try their best, as soon as possible", Wiggins said in a phone interview.

Shah and Wiggins now envision a scenario where dozens of cash-strapped cannabis producers file for bankruptcy or merge, while the black market will flourish for several years.

"Given the elevated inventory level now held by provinces, which we have anecdotally heard is largely the "mid-range" flower category, we believe provinces and retailers will likely implement price markdowns to accelerate product sell-through, "Chen wrote in a report to customers published Monday. It's certainly a possibility, and it might not be by choice either", Wiggins said".

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